Shoe Carnival improved its gross margin by 1.1 percentage points to 32.0 percent in the third fiscal quarter, delivering the company’s most profitable quarter ever, thanks to lower promotional activity. Net income advanced by 1 percent to $14.7 million.

After rebounding in the second quarter, Shoe Carnival’s sales slowed down in the third fiscal quarter ended on Oct. 31. The American footwear retailer reported flat revenues compared with the year-ago quarter at $274.6 million. Comparable store sales increased by 0.9 percent, as growth rates in the high twenties in September and mid-single in October offset a drop in August sales due to Covid-19 affecting the back-to-school season. Nearly all schools within the markets that Shoe Carnival operates delayed their start dates.

Despite all stores reopening in June, e-commerce remained strong this quarter, surging by 150 percent to represent more than 13 percent of turnover, compared with 6 percent in the third fiscal quarter of 2019. The company expects digital sales to represent 20 percent of revenues in 2023.

The company is renewing efforts to expand its ”buy online, pickup in store” service, which it said is still less than 25 percent of e-commerce orders, but growing rapidly.

During the period, Shoe Carnival opened one store, and none were closed, ending the period with 383 stores in 35 U.S. states and Puerto Rico. The company expects a total of four store openings and 13 store closures for the full year, compared to one store opening and six store closing last year.

By categories, adult athletics led overall sales, with women’s advancing by a low double-digit rate and men’s up by a mid single-digit rate. Both men’s and women’s sandals, canvas casuals and utility also did well. However, dress shoes fell by a double-digit rate, while children’s shoes fell by a low single-digit rate, as schools reopened much later in the quarter due to the pandemic.

The company’s Shoe Perks loyalty members were up by 10 percent over the prior year, reaching nearly 26 million. It aims to capture 5 million new members, online and in store, by 2023.

Shoe Carnival anticipates headwinds for the rest of the year due to the continuing pandemic and is not providing guidance for fiscal year 2020 due to the current uncertainty. It expects coronavirus to affect consumer spending in the retail sector, including during the peak holiday shopping period.